In its Full-Year Results for Fiscal Year 2023/24, Barry Callebaut said it has posted annual profit growth and is delivering on its ‘BC Next Level milestones’ introduced by CEO Peter Feld 12 months ago.
The company has pledged to “defend its market share in a challenging environment” and said it has managed to pass on higher raw material costs to customers. Annual revenue rose 22.6% to 10.4 billion Swiss Francs ($11.86bn), and recurring operating profit, adjusted for one-off items, was up 6.8% to 704.4 million francs.
High cocoa prices
High cocoa prices impacted Barry Callebaut’s sales volumes, which were flat for a straight second year. It warned of "significant uncertainty on how cocoa-related price increases will impact short-term demand.”
In a call to investors earlier this morning, Peter Vanneste, Chief Financial Officer, said that consumers can expect a 5%—15% price increase in the short term due to continued market pressure.
Barry Callebaut’s chocolate sales volumes were unchanged at 2.279 million tonnes at the end of its fiscal year in August, slightly under the 2.283 million tonnes it had predicted.
Unprecedented cocoa bean prices (up by 80%) in the last 12 months have hurt Barry Callebaut's cash flow, which stood at minus 2.3 billion Swiss francs at year's end. This has led to further borrowing from the company.
Anthony Myers
Vanneste said he expects to see some relief in cocoa bean prices over the coming months. However, he does not envisage the price hitting the historic levels reached earlier this year, when cocoa bean prices hit an all-time high of approximately $12,540 per metric tonne in April.
Peter Feld, CEO of Barry Callebaut Group, said: "I want to thank the entire Barry Callebaut team for their hard work and dedication throughout this special year, demonstrating strong resilience with the Full-Year 2023/24 results.
“Our teams faced an unprecedented cocoa supply and demand environment while delivering our BC Next Level strategic investment programme, which aims to boost services for our customers globally and improve working methods within the company.
“At the same time, we have adopted a new rigour to focus on what matters most to customers and implemented significant improvements to step change our performance. While we anticipate continued sourcing and subsequent market challenges in the near-term, we are focused on executing our BC Next Level investments to unlock our full potential to deliver the world's best chocolate solutions for our customers."
Anthony Myers
Barry Callebaut’s BC Next Level strategic investment programme has been implemented to streamline its operations, bring it closer to markets and customers, and foster ‘simplicity and digitalization.’
'Amazon like'
In the morning call to investors, Feld said part of the strategy was to create an ‘Amazon like’ customer experience incorporating sustainability, quality, and food safety. He said the company had made massive investments in changing how it delivers service to customers, and the company is transitioning from an ingredient supplier to a recognised chocolate solution advisor.
“For our customers, that's the journey that we're on. We're boosting understanding of what our customers need most and focus on that,” he said.
Barry Callebaut has opened Global Business Service (GBS) centers in Monterrey (Mexico) and Hyderabad (India) and closed manufacturing facilities in Europe and Malaysia. The company is standardising work processes globally and reducing SKUs by 25% from its inventory.
Gourmet recovery
Its Gourmet section has recovered and delivered +9.8% volume growth, with strong performance across geographies and market segments.
Barry Callebaut's Global Chocolate regional performance was boosted by Asia Pacific, Middle East, and Africa (+5.2%), with double-digit growth in the second half of the year supported by continued strong growth in India and improved performance in Indonesia. The supply-constrained environment impacted sales of cocoa butter and cocoa liquor.
It reported that demand for cocoa powder remained robust, with particular strength in India and Indonesia.